Mid-Atlantic Health Law TOPICS

Background hero atmospheric image for The Continued Demise of Gag Clauses

The Continued Demise of Gag Clauses

In recent years, HMOs have come under increasing fire for the practices used by some, but not all, HMOs. One such practice is the inclusion of so-called "gag clauses" in the contracts between HMOs and physicians.

"Gag clauses" refer to contractual provisions that prohibit physicians from being fully open with HMO patients about the terms of their coverage. Examples include: clauses that prevent physicians from discussing treatment options not covered by the health plan, or more broadly prohibit physicians from taking any action or making any communication which undermines an enrollee's confidence in the health plan; provisions that bar doctors from referring patients to non-participating specialists; and clauses that keep physicians from disclosing their financial relationship with the health plan.

Critics of "gag clauses" argue that they: interfere with the physician/patient relationship; destroy the trust that is critical between the patient and physician; inhibit physicians' fulfillment of their ethical duties to patients; and prevent patients from being given all relevant information necessary to make informed decisions about their health care.

Many HMOs have never used gag clauses. Others have eliminated these provisions from their contracts, and some have added contract provisions encouraging physicians to discuss fully with their patients any recommended treatment and any reasonable alternatives.

In addition, the American Association of Health Plans, a national trade association of HMOs, has launched its own initiative to end the use of gag clauses, called "Patients First," in an attempt at industry self-regulation. However, such initiatives are still being supplemented by legislation at both the federal and state levels.

At the federal level, the Clinton administration has banned gag clauses in physician contracts with HMOs serving the Medicare and Medicaid populations. A measure to protect most other health plan enrollees from gag clauses, entitled the "Patient Right to Know Act," which died in Congress last year, was re-introduced in the House of Representatives in February of this year.

Likewise, on the state level, at least 18 states have passed legislation prohibiting the use of gag clauses. Maryland's anti-gag clause legislation, which went into effect in 1996, was the result of an alliance of HMOs and physicians. Similar legislation is pending in several other states, signaling that the drive to eradicate gag clauses from HMO/physician contracts has not yet ended.


September 21, 1997




Rosen, Barry F.


Health Care